The chancellor has announced positive news for homebuyers in his 2021 budget, with the extension and introduction of schemes to support property purchases.
In his parliamentary statement today (March 3, 2021), Rishi Sunak said that there will be an extension to the stamp duty holiday and a return of 95 per cent government-backed mortgages to increase buyer confidence and further strengthen the housing market in England following the Covid-19 pandemic.
Relief for buyers as stamp duty holiday extended
After much market speculation, Mr Sunak announced that the stamp duty holiday will be extended for a total of six months to support those currently in the purchasing process and encourage further activity over the coming months.
Introduced in July 2020 to help support and accelerate the housing market during the pandemic, the stamp duty holiday was set to run until March 31, 2021. Since its introduction, the property market has grown at record levels, with 10-year high level price growth seen across the end of 2020.
However, it was predicted that if the holiday is ended at the end of this month, more than 100,000 buyers who agreed a purchase last year will lose out on the tax savings.
The chancellor has announced that the stamp duty holiday will continue in its current guise as a tax relief on all property purchases up to the value of £500,000 until June 30. After that, from July 1 until September 30, the stamp duty holiday threshold will be reduced to £250,000 for a further three months.
From October 1, the stamp duty holiday will end, and the threshold for paying the tax will return to any properties over £125,000.
Mortgage guarantee scheme to help buyers with five per cent deposits
Aspiring homeowners will also be pleased to hear of the return of 95 per cent mortgages, allowing purchasers to put down a smaller deposit on a new home. These mortgages will be guaranteed by the government, enabling lenders to provide these high mortgage deals, and act as part of the wider pledge from Prime Minster Boris Johnson to turn "generation rent" into "generation buy".
Under the chancellor’s new plans, buyers will be able to place down as little as a five per cent deposit on properties under the value of £600,000 – according to data from Rightmove, 86 per cent of all homes currently on the property market fall into this price bracket.
The mortgage guarantee scheme will be open to first-time buyers to make getting on the housing ladder more accessible by helping to reduce the significant cost of a deposit.
Positive news as the housing market recovery continues to accelerate
The latest announcements from Rishi Sunak is nothing but good news for homebuyers, as the housing market continues its accelerated growth since the first national lockdown in 2020.
Commenting on the budget announcement Avant Homes chief operating officer, Mark Mitchell, said: “The last 12 months have brought many challenges, which both purchasers and developers have never had to tackle before, so we welcome any measures that will assist homebuyers and continue to boost the market.
"Plans for the government to support first-time buyers with 95 per cent mortgages and the extension of the stamp duty holiday are excellent news for those looking to purchase a new home and we anticipate buyers will take full advantage of these schemes.”